Standards and Salary of Directors of Multi-Member LLCs

Regulations on the Director and General Director of a multi-member limited liability company. How are the standards and salaries of the Director and General Director of this company type regulated?

1. Who is the Director or General Director of a multi-member limited liability company?

Under Clause 1, Article 63 of the Law on Enterprises 2020 on the concept of Director and General Director as follows:

“The Director or General Director is the person who manages the daily business operations of the company and is responsible to the Members’ Council for the exercise of his/her rights and obligations.”

2. Rights and obligations of the Director and General Director of a multi-member LLC

Under Clause 2, Article 63 of the Law on Enterprises 2020 on the rights and obligations of the Director and General Director as follows:

– Organize the implementation of resolutions and decisions of the Members’ Council;

– Decide on matters relating to the company’s daily business operations;

– Organize the implementation of the company’s business plan and investment plan;

– Issue the company’s internal management regulations, unless the company charter provides otherwise;

– Appoint, dismiss and remove managers in the company, except titles under the authority of the Members’ Council;

– Sign contracts in the company’s name, except where under the authority of the Chairman of the Members’ Council;

– Propose the company’s organizational structure plan;

– Submit annual financial statements to the Members’ Council;

– Propose plans for profit use and distribution or loss handling in business;

– Recruit employees;

– Other rights and obligations as provided in the company charter, resolutions and decisions of the Members’ Council, and the labor contract.

In addition, Clauses 1 and 2, Article 71 of the Law on Enterprises 2020 provide for the responsibilities of the Director and General Director of a multi-member LLC as follows:

– The Chairman of the Members’ Council, the Director or General Director and other managers, the legal representative, and the Controllers of the company have the following responsibilities:

+ Exercise rights and obligations honestly, carefully and in the best manner to ensure the maximum lawful interests of the company;

+ Be loyal to the interests of the company; not abuse position or office and not use the company’s information, know-how, business opportunities or other assets for personal gain or to serve the interests of other organizations or individuals;

+ Promptly, fully and accurately notify the company of enterprises that he/she owns or in which he/she holds shares or contributed capital, and enterprises that his/her related persons own, co-own or separately own controlling shares or contributed capital;

+ Other responsibilities as provided by law and the company charter.

– The Director or General Director may not increase salary or pay bonuses when the company is unable to pay due debts in full.

3. What are the standards and conditions to serve as Director or General Director of a multi-member LLC?

Under Article 64 of the Law on Enterprises 2020 on the standards and conditions to serve as Director or General Director of a multi-member LLC as follows:

“Article 64. Standards and conditions to serve as Director or General Director

1. Not falling under the subjects in Clause 2, Article 17 of this Law.

2. Having professional qualifications and experience in the company’s business management and other conditions as provided in the company charter.

3. For state-owned enterprises as provided in point b, Clause 1, Article 88 of this Law and subsidiaries of state-owned enterprises as provided in Clause 1, Article 88 of this Law, the Director or General Director must satisfy the standards and conditions in Clauses 1 and 2 of this Article and must not be a family member of the company’s managers, the company’s Controllers and the parent company; the enterprise’s capital representative, or the state capital representative at the company and the parent company.”

Accordingly, to become the Director of a multi-member LLC, one must satisfy the above standards and conditions.

4. How is the salary of the Director or General Director of a multi-member LLC determined?

Article 66 of the Law on Enterprises 2020 provides on this matter as follows:

“Article 66. Salaries, remuneration, bonuses and other benefits of the Chairman of the Members’ Council, Director, General Director and other managers

1. The company pays salaries, remuneration, bonuses and other benefits to the Chairman of the Members’ Council, the Director or General Director and other managers based on business results and efficiency.

2. Salaries, remuneration, bonuses and other benefits of the Chairman of the Members’ Council, the Director or General Director and other managers are included in business expenses in accordance with the law on corporate income tax and relevant laws, and must be shown as a separate item in the company’s annual financial statements.”

Based on the above provisions, there is no specific salary level for the position of Director or General Director of a multi-member LLC; the company pays salary, remuneration, bonuses and other benefits to the Director based on business results and efficiency.